OTTAWA — The federal government knows it doles out $295 million in incorrect payments to Employment Insurance claimants.

And it knows about $100 million of that is a result of fraud.

What the department running the EI program hasn’t shown, however, is how it can use the data at its fingertips to collect hundreds of millions of dollars in EI “overpayments” the federal government is owed, Canada’s auditor general says.

In the 2011-2012 fiscal year, Human Resources and Skills Development Canada processed 2.9 million claims and gave $16.1 million in payments to eligible EI claimants.

“With so many beneficiaries and such a large amount of benefits paid out each year, Human Resources and Skills Development Canada has to ensure that it prevents, detects and recovers overpayments so that the program remains fair and costs to contributors are minimized,” Auditor General Michael Ferguson said as he released his spring report.

A spokeswoman for Human Resources Minister Diane Finley said the government agreed with Ferguson’s recommendations.

“As we have said all along, Service Canada has an obligation to find and stop inappropriate claims,” Alyson Queen said.

“We will continue to ensure that Canadians who have paid into the system can always access these benefits when they need them.”

Incorrect payments can happen through an error by a claimant or employer who reports too little income for a given period, or administrative errors by the department itself. When that happens, the department pays out more than a claimant is eligible for in a given reporting period.

More than one-third of overpayments are a result of fraud, or more than $110 million each fiscal year, according to the auditor’s report.

Overall, the amount of overpayments owed to the department stood at $662 million at the end of the 2011-2012 fiscal year, including penalties and interest. While that’s a small percentage of the billions paid out by the EI program, “it remains a significant amount owed to the Crown,” auditors wrote.

While the department has a data on overpayments — why they happen and how to identify risky accounts to chase — auditors found little evidence the information was being used to hone collection efforts.

Each year, the government writes off tens of millions of dollars in overpayments, penalties and interest that it never expects to collect. In the 2011-2012 fiscal year, that amounted to $62 million.

As of March 31, 2012, the department estimated that two-thirds of the $662 million owed to it through overpayments was unlikely to be collected.

Collecting the debts is also hindered by a backlog of flagged claims that reached 66,000 by the end of the 2011-2012 fiscal year, a 200-per-cent increase since March 2009.

At the same time, there were 400,000 cases pending investigation.

As the backlog builds, the legislative time limits to go after a claimant begin to kick in, with about 1,500 cases expiring each month – about 18,000 a year. The value of those cases is about $10 million — money identified as being owed back to the government, but which cannot be recovered.